No one who spends any time walking around Columbia Heights, U Street or Logan Circle probably needed the New York Times to tell them that there are way more condos on the market than people to buy them. But it’s nice the rest of the country now knows how shortsighted our local real estate developers and investors have been. From today’s Times:
In hopes of salvaging something from their costly plans, hundreds of developers like Mr. Franco are looking to the strong market for apartments, planning to rent their units for at least a couple of years while waiting for today’s condo surplus to shrink. Mr. Franco and Mr. Blum hope to break ground on what will be a somewhat less expensive building this spring.
In some cases, developers are even turning older buildings back to rentals after a brief or aborted attempt at condo conversion. Meanwhile, another 2,500 proposed condominiums in the Washington area have been scrapped altogether, according to Delta Associates, a real estate research firm.
The latest salvage operation on the part of condo developers is far from a sure bet, however. Condominium buildings generally cost more to build and operate than those built for apartments from scratch. And while rents are high and rising in most cities, in many cases they still are not sufficient to turn a profit.
In other words, it’s officially a buyer’s market, kids. According to the article, condo sales fell consistently throughout 2006, while conversions to rental units have jumped during the same period. If you’ve been eyeing that $879,000 two-bedroom wonder in the newly-renovated Columbia Hospital for Women in Foggy Bottom, now might be the best time to buy. Heck, you might be able to get it at $800,000, a steal for a well-to-do first-time buyer. Renters may also be in for a treat — as more condos are converted to rentals, analysts argue that the increased supply will drag down rents, which grew at 6.1 percent last year.
A number of questions remain, though. How will the local economy fare throughout this downturn in the housing market? Will those anxious condo developers and owners eventually get to unload their investments at something close to a profit? Market analysts, housing stock aficionados, and developers — have at it. Let us know what your take is.
Photo by jcairns
